nach oben

Asia Pacific Journal of Management

Erschienen in:

01.03.2016

The impact of product market competition on corporate environmental responsibility

verfasst von: X. H. Meng, S. X. Zeng, X. M. Xie, G. Y. Qi

Erschienen in: Asia Pacific Journal of Management | Ausgabe 1/2016

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

Although the mainstream of current thinking in the business literature recognizes that firms should invest in environmental responsibility, the theory on how product market competition affects firms’ environmental responsibility remains undeveloped. Using cost-benefit analysis, we hypothesize that the relationship between product market competition (i.e., differential industry-level competition and heterogeneous firm-level market power) and corporate environmental responsibility (CER) will be curvilinear. We find support for this hypothesis through an empirical test on a panel of 792 listed manufacturing companies from 2006 to 2008 in China. The results show that (1) either too much or too little industrial competition and (2) either too much or too little firm-level market power lead to lower environmental responsibility. Our results reveal that CER is strategically chosen and related to competitive situations.

Vorheriger Artikel Religious atmosphere, law enforcement, and corporate social responsibility: Evidence from China

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Based on the Industry Classification Guidance of Listed Companies issued by the China Securities Regulatory Commission in 2001.

Websites of Shanghai Stock Exchange (http://www.sse.com.cn) and Shenzhen Stock Exchange (http://www.szse.org.cn).

The NBS data contains annual survey data of all above-scale industrial firms in China (i.e., all state-owned enterprises and non-state-owned enterprises with sales above 5 million Chinese yuan). The dataset included 301,961, 336,768, and 412,000 firms in 2006, 2007, and 2008, respectively, spanning 30 two-digit manufacturing industries.

See environmental rules by SEPA in 2007, instructions for strengthening supervision of environmental protection of listed companies by SEPA in 2008, guidelines of CSR for Chinese listed companies by Shenzhen Stock Exchange in 2006, and guide to environmental report for listed companies by Shanghai Stock Exchange in 2008.

We also compute the total market share accounted for by the six and eight largest firms, CR6 and CR8. The variable of CR4 is highly correlated with CR6 and CR8 (the correlation coefficients are .981 and .975, respectively). If alternative measures are used for the concentration ratio, the results all have the same implications.

The calculation of firms’ capital stock is extremely complex. In our article, we estimate capital stock based on the Chinese accounting standards for business enterprises, following Li, Cheng, and Wang (2007). as follows: Capital stock = equity of common stockholders + minority interests + short-term loans + current liabilities falling due within one year + long-term loans + bonds payable + long-term accounts payable + deferred taxation credit + assets devaluing reserve (e.g., bad debt reserve, inventory falling price reserves, short-term investments, falling price reserves and long-term investments depreciation reserves) + non-operating expenses after tax − non-operating income after tax. All accounting data of listed companies were collected from the CSMAR database and their annual reports.

The risk-free rate for 2006–2008 was 2.35, 3.21, and 3.92 %, respectively.

According to Nickell (1996). the depreciation rate is assumed to be constant at 4 %. Beiner et al. (2011) also used the assumption of 4 % following Nickell (1996). We also apply a second measure of rents based on depreciation of 4 % and found it was highly correlated with rents when using depreciation of 7.3 % (r = .987). We found that the results are qualitatively robust to using 7.3 % instead of 4 %.

The Annual Report of the Marketization Index of China, a series of reports of marketization for the 31 provinces and province-equivalent municipal cities by Fan, Wang, and Zhu (2007).

Based on the regulations promulgated by the Ministry of Environmental Protection of China, the selected environmentally sensitive industries include: food and drink (i.e., 13, 14, and 15); textile, clothing, and fur (i.e., 17, 18, and 19); paper making and printing (i.e., 22 and 23); petroleum, chemistry, and plastic (i.e., 25, 26, 28, 29, and 30); metal and nonmetal smelting (i.e., 31, 32, 33, and 34); and medicine and biological products (i.e., 27). The numbers in parentheses are the two-digit codes of manufacturing industries assigned by the NBS (Table 1).

See more details as discussed by Petersen (2009). STATA software programming advice is accessible on Petersen’s Web page (www.kellogg.northwestern.edu/faculty/petersen/htm/papers/se/se_programming.htm).

The relationship between economic performance and corporate social and environmental responsibility may be complex. See Hart and Ahuja (1996), Kim and Statman (2012), Margolis, Elfenbein, and Walsh (2007), Margolis and Walsh (2003), and Waddock and Graves (1997).

Al-Tuwaijri, S. A., Christensen, T. E., & Hughes, K. E. 2004. The relations among environmental disclosure, environmental performance, and economic performance: A simultaneous equations approach. Accounting, Organizations and Society, 29(5–6): 447–471.CrossRef

Bai, X., & Chang, J. 2015. Corporate social responsibility and firm performance: The mediating role of marketing competence and the moderating role of market environment. Asia Pacific Journal of Management, 32(2): 505–530.

Beiner, S., Schmid, M. M., & Wanzenried, G. 2011. Product market competition, managerial incentives and firm valuation. European Financial Management, 17(2): 331–366.CrossRef

Bragdon, J., & Marlin, J. 1972. Is pollution profitable?. Risk Management, 19: 9–18.

Brammer, S., & Pavelin, S. 2004. Building a good reputation. European Management Journal, 22(6): 704–713.CrossRef

Brammer, S., & Pavelin, S. 2006. Voluntary environmental disclosures by large UK companies. Journal of Business Finance & Accounting, 33(7–8): 1168–1188.CrossRef

Buysse, K., & Verbeke, A. 2003. Proactive environmental strategies: A stakeholder management perspective. Strategic Management Journal, 24(5): 453–470.CrossRef

Cai, H. B., & Liu, Q. 2009. Competition and corporate tax avoidance: Evidence from Chinese industrial firms. Economic Journal, 119(4): 764–795.CrossRef

Cai, L., & He, C. H. 2014. Corporate environmental responsibility and equity prices. Journal of Business Ethics, 125(4): 617–635.CrossRef

Campbell, J. L. 2007. Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32(3): 946–967.CrossRef

Chang, S. J., & Xu, D. 2008. Spillovers and competition among foreign and local firms in China. Strategic Management Journal, 29(5): 495–518.CrossRef

Child, J., & Tsai, T. 2005. The dynamic between firms’ environmental strategies and institutional constraints in emerging economies: Evidence from China and Taiwan. Journal of Management Studies, 42(1): 95–125.CrossRef

Cho, C. H., & Patten, D. M. 2007. The role of environmental disclosures as tools of legitimacy: A research note. Accounting, Organizations and Society, 32(7–8): 639–647.CrossRef

Clarkson, P. M., Li, Y., & Richardson, G. D. 2004. The market valuation of environmental expenditures by pulp and paper companies. Accounting Review, 79(2): 329–353.CrossRef

Clarkson, P., Li, Y., Richardson, G., & Vasvari, F. P. 2011. Does it really pay to be green? Determinants and consequences of proactive environmental strategies. Journal of Accounting and Public Policy, 30(2): 122–144.CrossRef

Cormier, D., & Magnan, M. 1999. Corporate environmental disclosure strategies: Determinants, costs and benefits. Journal of Accounting, Auditing & Finance, 14(4): 429–451.

Darnall, N., & Edwards, J. R. 2006. Predicting the cost of environmental management system adoption: The role of capabilities, resources and ownership structure. Strategic Management Journal, 27(4): 301–320.CrossRef

Darnall, N., Henriques, I., & Sadorsky, P. 2010. Adopting proactive environmental strategy: The influence of stakeholders and firm size. Journal of Management Studies, 47(6): 1072–1094.CrossRef

Du, X. Q., Jian, W., Zeng, Q., & Du, Y. J. 2014. Corporate environmental responsibility in polluting industries: Does religion matter?. Journal of Business Ethics, 124(3): 485–507.CrossRef

Elhauge, E. R. 2005. Sacrificing corporate profits in the public interest. New York University Law Review, 80(3): 733–869.

Fan, G., Wang, X. L., & Zhu, H. P. 2007. The marketization index in China. Beijing: Economy Science Press.

Fernandez-Kranz, D., & Santalo, J. 2010. When necessity becomes a virtue: The effect of product market competition on corporate social responsibility. Journal of Economics and Management Strategy, 19(2): 453–487.CrossRef

Fisman, R., Heal, G., & Nair, V. 2005. Corporate social responsibility: Doing well by doing good?. Working Paper, Wharton School, University of Pennsylvania.

Flammer, C. 2014. Does product market competition foster corporate social responsibility? Evidence from trade liberalization. Strategic Management Journal. doi:10.1002/smj.2307.

Gray, R., Javad, M., Power, D. M., & Sinclair, C. D. 2001. Social and environmental disclosure and corporate characteristics: A research note and extension. Journal of Business Finance & Accounting, 28(3–4): 327–356.CrossRef

Hart, S. L. 1995. A natural resource-based view of the firm. Academy of Management Review, 20(4): 986–1014.

Hart, S. L., & Ahuja, G. 1996. Does it pay to be green? An empirical examination of the relationship between emission reduction and firm performance. Business Strategy and the Environment, 5: 30–37.CrossRef

Hofer, C., Cantor, D. E., & Dai, J. 2012. The competitive determinants of a firm’s environmental management activities: Evidence from US manufacturing industries. Journal of Operations Management, 30(1–2): 69–84.CrossRef

Jacobs, B. M., Singhal, V. R., & Subramanian, R. 2010. An empirical investigation of environmental performance and the market value of the firm. Journal of Operations Management, 28(5): 430–441.CrossRef

Januszewski, S. I., Köke, J., & Winter, J. K. 2002. Product market competition, corporate governance and firm performance: An empirical analysis for Germany. Research in Economics, 56(3): 299–332.CrossRef

Jayachandran, S., Kalaignanam, K., & Eilert, A. M. 2013. Product and environmental social performance: Varying effect on firm performance. Strategic Management Journal, 34(10): 1255–1264.CrossRef

Jensen, M. C. 2000. Value maximization, stakeholder theory, and the corporate objective function. European Financial Management, 7(3): 297–317.CrossRef

Kassinis, G., & Vafeas, N. 2006. Stakeholder pressures and environmental performance. Academy of Management Journal, 49(1): 145–159.CrossRef

Kim, Y., & Statman, M. 2012. Do corporations invest enough in environmental responsibility?. Journal of Business Ethics, 105(1): 115–129.CrossRef

King, A., & Lenox, M. 2002. Exploring the locus of profitable pollution reduction. Management Science, 48(2): 289–299.CrossRef

Konar, S., & Cohen, M. A. 2001. Does the market value environmental performance?. Review of Economics and Statistics, 83(2): 281–289.CrossRef

Lopez-Gamero, M. D., Molina-Azorin, J. F., & Claver-Cortes, E. 2010. The potential of environmental regulation to change managerial perception, environmental management, competitiveness and financial performance. Journal of Cleaner Production, 18: 963–974.CrossRef

Li, Q. Y., Cheng, X., & Wang, Y. H. 2007. Product market competition, asset specificity and capital structure. Journal of Financial Research, 322(4): 100–106 (in Chinese).

Liu, X. B., & Anbumozhi, V. 2009. Determinant factors of corporate environmental information disclosure: An empirical study of Chinese listed companies. Journal of Cleaner Production, 17(6): 593–600.CrossRef

Liu, X. X., & Jiang, Y. J. 2011. Product market competition, executive’s incentive and corporate social responsibility from the perspective of donation. Finance and Accounting Monthly, 8: 15–17 (in Chinese).

Lu, Z. W., & Liu, C. L. 2011. An empirical study on influence of product market competition on corporate charitable contributions. Chinese Journal of Management, 8(7): 1067–1074 (in Chinese).

Margolis, J. D., & Walsh, J. P. 2003. Misery loves companies: Rethinking social initiatives by business. Administrative Science Quarterly, 48(2): 268–305.

Margolis, J. D., Elfenbein, H. A., & Walsh, J. P. 2007. Does it pay to be good? A meta-analysis and redirection of research on the relationship between corporate social and financial performance. Working paper, Harvard Business School.

McWilliams, A., & Siegel, D. 2001. Corporate social responsibility: A theory of the firm perspective. Academy of Management Review, 26(1): 117–127.

Melnyk, S. A., Sroufe, R. P., & Calantone, R. 2003. Assessing the impact of environmental management systems on corporate and environmental performance. Journal of Operations Management, 21(3): 329–351.CrossRef

Meng, X. H., Zeng, S. X., Tam, C. M., & Xu, X. D. 2013. Whether top executives’ turnover influences environmental responsibility: From the perspective of environmental information disclosure. Journal of Business Ethics, 114(2): 341–353.CrossRef

Miles, M. P., & Covin, J. G. 2000. Environmental marketing: A source of reputational, competitive, and financial advantage. Journal of Business Ethics, 23(3): 299–311.CrossRef

Nickell, S. J. 1996. Competition and corporate performance. Journal of Political Economy, 104(4): 724–746.CrossRef

Petersen, M. 2009. Estimating standard errors in finance panel data sets: Comparing approaches. Review of Financial Studies, 22(1): 435–480.CrossRef

Petrick, J. A., Scherer, R. F., Brodzinski, J. D., & Quinn, J. F. 1999. Global leadership skills and reputational capital: Intangible resources for sustainable advantage. Academy of Management Executive, 13(1): 58–69.

Porter, M. E. 1985. Competitive advantage: Creating and sustaining superior performance. NewYork: Free Press.

Porter, M. E., & van der Linde, C. 1995. Toward a new conception of the environment competitiveness relationship. Journal of Economic Perspectives, 9(4): 97–119.CrossRef

Quairel-Lanoizelée, F. 2011. Are competition and corporate social responsibility compatible?: The myth of sustainable competitive advantage. Society and Business Review, 6(1): 77–98.CrossRef

Richardson, A. J., & Welker, M. 2001. Social disclosure, financial disclosure and the cost of equity capital. Accounting, Organizations and Society, 26(7–8): 597–616.CrossRef

Russo, M. V., & Fouts, P. A. 1997. A resource-based perspective on corporate environmental performance and profitability. Academy of Management Journal, 40(3): 534–559.CrossRef

Russo, M. V., & Harrison, N. S. 2005. Organizational design and environmental performance: Clues from the electronics industry. Academy of Management Journal, 48(4): 582–593.CrossRef

Sarkis, J., & Dijkshoorn, J. 2007. Relationships between solid waste management performance and environmental practice adoption in Welsh small and medium-sized enterprises. International Journal of Production Research, 45(21): 4989–5015.CrossRef

Sarkis, J., Gonzalez-Torre, P., & Adenso-Diaz, B. 2010. Stakeholder pressure and the adoption of environmental practices: The mediating effect of training. Journal of Operations Management, 28(2): 163–176.CrossRef

Schneiberg, M. 1999. Political and institutional conditions for governance by association: Private order and price controls in American fire insurance. Politics and Society, 27(1): 67–103.CrossRef

Sharma, S. 2000. Managerial interpretations and organizational context as predictors of corporate choice of environmental strategy. Academy of Management Journal, 43(4): 681–697.CrossRef

Sharma, S., & Vredenburg, H. 1998. Proactive corporate environmental strategy and the development of competitively valuable organizational capabilities. Strategic Management Journal, 19(8): 729–753.CrossRef

Tirole, J. 1988. The theory of industrial organization. Cambridge: MIT Press.

van de Ven, B., & Jeurissen, R. 2005. Competing responsibly. Business Ethics Quarterly, 15(2): 299–317.CrossRef

Waddock, S. A., & Graves, S. B. 1997. The corporate social performance-financial performance link. Strategic Management Journal, 18(4): 303–319.CrossRef

Wagner, M. 2005. How to reconcile environmental and economic performance to improve corporate sustainability: Corporate environmental strategies in European paper industry. Journal of Environmental Management, 76(2): 105–118.CrossRef

Walley, N., & Whitehead, B. 1994. It’s not easy being green. Harvard Business Review, 72(5): 46–52.

Wan, D. H. 2009. A new estimation method of economic depreciation rate and its application. Statistical Research, 26(10): 15–18 (in Chinese).

Weber, O., Koellner, T., Habegger, D., Steffensen, H., & Ohnemus, P. 2008. The relation between sustainability performance and financial performance of firms. Progress in Industrial Ecology, 5(3): 236–254.CrossRef

Xu, X. D., Zeng, S. X., & Tam, C. M. 2012. Stock market’s reaction to disclosure of environmental violation: Evidence from China. Journal of Business Ethics, 107(2): 227–237.CrossRef

Yang, Z. Z., & Qiao, Y. H. 2013. The industrial competition attribute, firm’s characteristics and CSR. Science Research Management, 34(3): 58–66 (in Chinese).

Zeng, S. X., Xu, X. D., Dong, Z. Y., & Tam, V. W. Y. 2010. Towards corporate environmental information disclosure: An empirical study in China. Journal of Cleaner Production, 18(12): 1142–1148.CrossRef

Zeng, S. X., Xu, X. D., Yin, H. T., & Tam, C. M. 2012. Factors that drive Chinese listed companies in voluntary disclosure of environmental information. Journal of Business Ethics, 109(3): 309–321.CrossRef

Zhang, R., Zhu, J. G., Yue, H., & Zhu, C. Y. 2010. Corporate philanthropic giving, advertising intensity, and industry competition level. Journal of Business Ethics, 94: 39–52.CrossRef

Zhu, Q. H., & Sarkis, J. 2004. Relationships between operational practices and performance among early adopters of green supply chain management practices in Chinese manufacturing enterprises. Journal of Operations Management, 22(3): 265–289.CrossRef

Titel: The impact of product market competition on corporate environmental responsibility
verfasst von: X. H. Meng
S. X. Zeng
X. M. Xie
G. Y. Qi
Publikationsdatum: 01.03.2016
Verlag: Springer US
Erschienen in: Asia Pacific Journal of Management / Ausgabe 1/2016
Print ISSN: 0217-4561
Elektronische ISSN: 1572-9958
DOI: https://doi.org/10.1007/s10490-015-9450-z

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 1/2016

Inter-firm collaboration in new product development in Chinese pharmaceutical companies

Emotional stability: A new construct and its implications for individual behavior in organizations

Violation and activation of gender expectations: Do Chinese managerial women face a narrow band of acceptable career guanxi strategies?

Does CSR practice pay off in East Asian firms? A meta-analytic investigation

Boundary conditions of the emotional exhaustion-unsafe behavior link: The dark side of group norms and personal control

Team learning: The missing construct from a cross-cultural examination of higher education

Premium Partner